The Himachal Pradesh High Court held that VAT is payable on milk cream.
“We are of the opinion that in the instant case also, a scientific or technical meaning of the term ‘milk cream’, as is sought to be projected by the assessee, should not be adopted and the popular meaning of milk cream as is commonly understood, should be taken note of, i.e. that it is a product which is different from milk. This is because a person who wishes to buy milk cream would not go to the market and ask for milk. He would only ask for milk cream because it is a separate product though also a milk product,” the high court said.
M/s Gujarat Co-Operative Milk Marketing is engaged in trading of milk products, milk, edible oils etc. The assessee is dealing with is “milk cream”.
Gujarat Co-Operative Milk Marketing submitted that there being no entry in the Act dealing with milk cream, the Central Excise HSN Classification Entry no.16 should be taken into account and in that entry, which relates to fresh milk and pasteurized milk, the product cream is also included and, therefore, it should be taken into account, and since milk is not taxable, milk cream also ought not to be taxed.
The authority said that milk and milk cream are totally different products and nobody, who intends to buy milk cream, would ask for milk, and so the common parlance test needs to be applied in such situations.
The high court held that It stated that resort to interpretation in terms of scientific and technical meaning should be avoided in such circumstances, except where the legislature has expressed a contrary intention.